Organ Cole, L.L.P. v. Andrew ( 2021 )

[Cite as Organ Cole, L.L.P. v. Andrew, 2021-Ohio-924.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Organ Cole, LLP, :
Plaintiff-Appellee, :
No. 20AP-65
v. : (C.P.C. No. 18CV-6818)
Carleton Scott Andrew et al., : (REGULAR CALENDAR)
Defendants-Appellants. :
D E C I S I O N
Rendered on March 23, 2021
On brief: Cooper & Elliott, LLC, Charles H. Cooper, Jr., and
Barton R. Keyes, for appellee. Argued: Charles H. Cooper, Jr.
On brief: Arenstein & Andersen Co., LPA, Nicholas I.
Andersen, Eric R. McLoughlin, and Jessica L. Sohner, for
appellants. Argued: Nicholas I. Andersen.
APPEAL from the Franklin County Court of Common Pleas
MENTEL, J.
{¶ 1} Defendants-appellants, Carleton Scott Andrew and Retail Service Systems,
Inc. ("RSS"), appeal from an order of the Franklin County Court of Common Pleas
sustaining a motion to compel filed by plaintiff-appellee, Organ Cole, LLP ("Organ Cole"),
arguing that the trial court improperly ordered the disclosure of RSS's trade secrets. Organ
Cole has filed a motion to dismiss the appeal for lack of jurisdiction on the grounds that the
trial court's ruling is not a final, appealable order. For the reasons that follow, we sustain
Organ Cole's motion and dismiss the appeal.
{¶ 2} In November 2012, Mr. Andrew hired Organ Cole to collect on a judgment
that he had obtained in 2011. (Oct. 1, 2018 Second Am. Compl. at ¶ 9.) Under the parties'
fee agreement, Mr. Andrew agreed to pay Organ Cole 15 percent of any "Net Recovery" of
the judgment obtained before a hearing, or 20 percent if a hearing was required. (Second
Am. Compl., Ex. 1 at 2.) The agreement defined "Net Recovery" as "the amount remaining
No. 20AP-65 2
after the total amount received (whether by settlement, arbitration award, or court
judgment)," minus costs. Id. Mr. Andrew admits that "Organ Cole vigorously represented"
his interests and, after a hearing, "obtained a favorable settlement" that included "most" of
the debtor's assets, "including intellectual property and proprietary marketing materials
related to [its] business, and contract rights regarding [its] former dealers and franchisees."
(Oct. 15, 2018 Answer at ¶ 2.) He also admits that "after obtaining this settlement," he
transferred the debtor's "assets to a newly formed entity," RSS, and "began to carry on" the
debtor's business. Id. Organ Cole alleges that the fee agreement entitles it to "either a 20%
interest in the assets themselves, or 20% of the value of the assets at the time" of settlement,
which it values at $345,000, and that Mr. Andrew never honored the agreement. (Second
Am. Compl. at ¶ 13-14.) Organ Cole continued to perform legal work for Mr. Andrew and
RSS, but eventually filed the present lawsuit to collect on allegedly unpaid fees. (Second
Am. Compl. at ¶ 15-72.)
{¶ 3} During discovery, a dispute arose concerning the disclosure of RSS's financial
documents. Organ Cole requested its "federal, state and local tax returns" since 2013, "all
financial statements," including "income statements and revenue streams, accounts
receivable, and financial projections" since 2013, and any documents supporting claims
that RSS had made regarding its annual revenue and growth rate. (Aug. 27, 2019 Mot. to
Compel, Ex. A.) RSS objected to these requests. (Mot. to Compel, Ex. B at 15-17.) Organ
Cole filed a motion to compel, arguing that the documents were "run-of-the-mill financial
information" that were relevant to the valuation of RSS and Mr. Andrews' prior assertions
that the company "lacked the resources" to pay for the legal fees owed. (Mot. to Compel,
Ex. B at 7-8.)
{¶ 4} Mr. Andrew and RSS opposed Organ Cole's motion to compel and moved the
trial court for a protective order under Civ.R. 26(C) to prevent disclosure of the financial
documents. (Aug. 21, 2019 Combined Mot. and Memo. in Opp.) They argued that Organ
Cole's requests were not relevant to its collection claim because, as stated in the complaint,
the firm was only entitled to a percentage of what the debtor's assets were worth at the times
of settlement, not their value "six years later." (Combined Mot. and Memo. in Opp. at 8.)
They criticized attorney Shawn Organ for testifying during his deposition that Organ Cole
"was now asserting a claim to a present 20% interest in RSS, an entirely new theory and
one that is not supported by a shred of evidence." (Combined Mot. and Memo. in Opp. at
No. 20AP-65 3
2.) Mr. Andrew and RSS also resisted Organ Cole's discovery request for purportedly
seeking "trade secrets or other confidential research, development, or commercial
information" subject to a protective order under Civ.R. 26(C). (Combined Mot. and Memo.
in Opp. at 5.) An attached affidavit sworn by Mr. Andrew stated that the financial
documents sought by Organ Cole were "secret, confidential and proprietary information,"
accused the firm of "improperly shared confidential information" in the complaint by
disclosing recovery sums and asserted a fear that the firm would "publicly disclose or
otherwise misuse" the information and cause "grievous economic harm" to RSS.
(Combined Mot. and Memo. in Opp., Ex. B at 2-3.)
{¶ 5} The trial court rejected these arguments and sustained Organ Cole's motion.
It considered the relevancy argument premature to consider because the discovery dispute
was "not a motion for summary judgment. The merits of Plaintiff's claims are not yet before
the Court." (Jan. 9, 2020 Entry at 3.) The trial court also rejected the assertion that RSS's
financial documents amounted to trade secrets: "Defendants fail to cite any case law
supporting Mr. Andrew's conclusion that general financial information, like tax returns,
financial statements, revenue figures, banking information, profit and loss statements,
financial projections, and the like are trade secrets requiring protection." (Entry at 3-4.)
Accordingly, the trial court granted Organ Cole's motion to compel. However, noting that
Mr. Andrew and RSS "seem[ed] concerned with the protection of the materials," it ordered
the parties to "create an agreed protective order covering the exchange of the materials and
submit it to the Court by February 3, 2020," with a further deadline of March 6, 2020 for
their disclosure.
{¶ 6} On January 31, 2020, Mr. Andrew and RSS appealed the trial court's ruling.
They assert the following assignment of error:
The trial court erred when it granted Plaintiff-Appellee Organ
Cole, LLP's Motion to Compel and ordered Defendant-
Appellant Retail Service Systems, Inc. to produce irrelevant
documents and deposition testimony containing trade secrets
and other confidential information without first conducting a
hearing and an in-camera review.
{¶ 7} Organ Cole has responded to the appeal with a brief addressing its merits, but
also with a motion to dismiss arguing that this court lacks jurisdiction because the trial
court's discovery ruling was not a final, appealable order. When a party raises this threshold
No. 20AP-65 4
issue, "we begin by examining the question of the court's jurisdiction." Jack Maxton
Chevrolet, Inc. v. Hanbali, 10th Dist. No. 15AP-816, 2016-Ohio-1244, ¶ 5.
{¶ 8} "Courts of appeals shall have such jurisdiction as may be provided by law to
review and affirm, modify, or reverse judgments or final orders" from the courts of common
pleas. Ohio Constitution, Article IV, Section 3. "As a general rule, discovery orders are
interlocutory in nature, and not immediately appealable." (Citations omitted.) Dispatch
Printing Co. v. Recovery L.P., 166 Ohio App.3d 118, 2006-Ohio-1347, ¶ 7 (10th Dist.).
However, "certain discovery orders may be final and appealable if they meet the
requirements of R.C. 2505.02(B)(4)." State ex rel. Thomas v. McGinty, __ Ohio St.3d __,
2020-Ohio-5452, ¶ 43 (slip opinion). The statute allows appellate review of "[a]n order that
grants or denies a provisional remedy" that meets two conditions. R.C. 2505.02(B)(4).
First, "[t]he order in effect determines the action with respect to the provisional remedy
and prevents a judgment in the action in favor of the appealing party with respect to the
provisional remedy." R.C. 2505.02(B)(4)(a). Second, "[t]he appealing party would not be
afforded a meaningful or effective remedy by an appeal following final judgment as to all
proceedings, issues, claims, and parties in the action." Id.{¶ 9} The definition of a "provisional remedy" includes "a proceeding ancillary to
an action, including * * * discovery of privileged matter." R.C. 2505.02(B)(4). A discovery
ruling ordering the disclosure of trade secrets constitutes a provisional remedy under R.C.
2505.02(B)(4), and, hence, a final, appealable order. Dispatch Printing Co. at ¶ 8, citing
Gibson-Myers & Assocs. v. Pearce, 9th Dist. No. 19358 (Oct. 27, 1999). In Dispatch
Printing Co., we adopted the Ninth District Court of Appeal's reasoning in Gibson-Myers
as to why an order to disclose trade secrets qualifies as a provisional remedy under R.C.
2505.02(B)(4):
"If a trial court orders the discovery of trade secrets and such
are disclosed, the party resisting discovery will have no
adequate remedy on appeal. The proverbial bell cannot be
unrung and an appeal after final judgment on the merits will
not rectify the damage. In a competitive commercial market
where customers are a business' most valuable asset and
technology changes daily, disclosure of a trade secret will surely
cause irreparable harm."
Id., quoting Gibson-Myers.
No. 20AP-65 5
{¶ 10} There is one additional jurisdictional contour relevant to such orders. If the
trial court's ruling contains "adequate safeguards" to protect a party's trade secrets from
damaging disclosure, the ruling is not a provisional remedy subject to interlocutory appeal.
Id. at ¶ 10. In Dispatch Printing Co., we held that the following order satisfied this standard:
"Concerns about public disclosure of proprietary information and trade secrets can be
resolved by an appropriate protective order. Plaintiffs have offered a comprehensive
confidentiality agreement. The court is satisfied that any legitimate trade secrets or
proprietary information can be protected from public disclosure." Even though "the exact
type of safeguards and the mechanics of how they will be implemented [were] not clear, the
trial court did indicate the use of protective orders and confidentiality agreements." Id. at
¶ 13. This served as adequate assurance that the trial court would take the steps "necessary
to protect the dissemination of proprietary material and trade secret information." Id.
{¶ 11} Organ Cole argues that here, as well, "adequate safeguards" were in place, as
evidenced by the ruling requiring the parties to prepare a protective order for the trial
court's review. (Mar. 25, 2020 Mot. to Dismiss at 19.) Thus, Organ Cole believes that under
Dispatch Printing Co., we lack jurisdiction over the appeal. Id.
{¶ 12} Mr. Andrew and RSS counter that the trial court ruling in Dispatch Printing
Co. was a "directory order" and not an order to produce specific documents, whereas they
have appealed from an "order compelling the production of information that RSS alleges
contains trade secrets and other confidential information that Ohio courts have repeatedly
held are final appealable orders." (Aug. 7, 2020 Combined Memo. in Opp. at 9.) They argue
that the trial court failed to meet the "adequate safeguards" standard of Dispatch Printing
Co. because its order "failed to define the terms of the agreed protective order" and it did
not "hold a hearing or [] conduct an in-camera review prior to ordering RSS to disclose the
requested information." (Combined Memo. in Opp. at 10.)
{¶ 13} We are not persuaded by these somewhat strained distinctions. In Dispatch
Printing Co., we emphasized that "[it] is important to bear in mind the underlying rationale
for finding an order compelling discovery to be a final appealable order, which is to prevent
the dissemination of protected materials, and avoid the quagmire of being unable to unring
the proverbial bell." Dispatch Printing Co. at ¶ 13. The question is whether the trial court's
order demonstrates a sensitivity to the protesting party's concerns and an intention to take
the necessary steps to protect the materials. In this case, the trial court went beyond the
No. 20AP-65 6
Dispatch Printing Co. standard, where a protective order and "hearings, in camera
inspections, and the like, [if] warranted," were merely contemplated. Dispatch Printing
Co. at ¶ 13. Here, the trial court actually required a protective order. In addition, it ordered
that the parties submit the order for its review one month before the deadline for disclosure.
This demonstrated the trial court's willingness to oversee the process and protect the
materials from the danger of "unfettered discovery coupled with the danger of being unable
to unring the proverbial bell." Id. at ¶ 9. Rather than avail themselves of this opportunity,
Mr. Andrew and RSS appealed, which undercut the trial court's ability to implement the
safeguards that were wholly adequate to address the concerns raised.
{¶ 14} Because the trial court's order met the Dispatch Printing Co. standard for
protecting any trade secrets of RSS, it was not a provisional remedy that qualifies as a final,
appealable order under R.C. 2505.02. Thus, we lack jurisdiction to review the substance of
the trial court's order beyond the "adequate safeguards" it created. Mr. Andrew and RSS's
challenge to the trial court's conclusion that the information did not actually constitute
trade secrets, as well as the argument that the trial court erred by failing to "conduct an
evidentiary hearing [or] an in-camera review" prior to making this ruling, remain for the
time being outside the boundaries of appellate review. (Combined Memo. in Opp. at 12.)
See Schottenstein, Zox & Dunn v. McKibben, 10th Dist. No. 01AP-1384, 2002-Ohio-5075(overruling a motion to dismiss the appeal for lack of jurisdiction because "the trial court's
decision on the motion to compel discovery constitute[d] a final appealable order" under
R.C. 2505.02, thereby allowing it to reach the merits and hold that the trial court erred by
failing to conduct "an in-camera review of the client file which was subject to the discovery
order").
{¶ 15} Having determined that the trial court's order is not a final, appealable order,
we conclude that we lack jurisdiction to hear the appeal and sustain Organ Cole's motion.
The appeal is dismissed.
Motion to dismiss sustained; appeal dismissed.
KLATT and BEATTY BLUNT, JJ., concur.
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